The commodity sector has been rallying, reaching all-time highs, but what does this mean for the Federal Reserve’s fight against inflation? HSBC Chief Multi-Asset Strategist Max Kettner joins Catalysts to discuss his outlook.
Kettner says the commodity rally has not "reignited a lot of those inflationary concerns." He notes that rallies such as the one occurring in Gold (GC=F) are coming from central bank buying. He also points out that commodities benefitted from less diversification happening in areas such as bonds coming off the Fed’s rate hike cycle, pushing assets like Gold higher as well.
On the natural gas front, Kettner says he is not concerned, though he cautions if oil (CL=F, BZ=F) and natural gas (NG=F) prices were to rise simultaneously, it could pose a problem for markets. However, he says current energy prices in the US are still "relatively tame," adding that this indicates "we’re nowhere near hitting that 2% inflation target anytime soon."
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